Covestro: EU clears takeover by Adnoc under strict conditions – Focus on competition and access to technology

The European Commission has approved the planned acquisition of plastics and chemicals group Covestro by the Abu Dhabi National Oil Company (Adnoc) under the Foreign Subsidies Regulation (FSR) – but only subject to strict conditions. The decision is particularly relevant for the European plastics industry, as Covestro is a key supplier of polyurethanes, polycarbonates, and sustainable polymer solutions.

Focus on competition-relevant subsidies
In its review, the Commission found that Adnoc and Covestro had received financial support from the United Arab Emirates that could influence market structures within the EU. An unlimited state guarantee for Adnoc as well as a promised capital increase for Covestro could, according to the Commission, distort risk positions and enable aggressive investment strategies.

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Such effects would be particularly relevant for polymer-processing sectors and downstream value chains if the merged company were to gain disproportionately large financial leeway.

Conditions affecting access to technology and innovation dynamics
For approval of the transaction, the EU requires two essential measures:

Removal of the unlimited state guarantee by aligning Adnoc’s articles of association with the regular insolvency legislation of the UAE.

Licensing of selected Covestro patents related to sustainability technologies to certain market participants under transparent conditions.

The latter mainly concerns processes and solutions that are critical for lower-emission, more energy-efficient or circular polymer production. Affected user industries – including plastics processors, compounders and manufacturers of high-performance polymers – are to retain access to key enabling technologies.

These commitments apply for ten years; concluded licensing agreements will remain valid beyond this period.

Implications for the plastics industry
The decision aims to ensure that technological competition in the field of sustainable plastics is not restricted. Access to Covestro’s patents is a strategic factor for many market players, as the industry faces strong innovation and transformation pressures – from CO₂-reduction requirements and circular-economy demands to new polymer categories and recycling technologies.

The EU emphasizes that the conditions are intended to safeguard innovation momentum for the European plastics industry – especially in the field of sustainable materials, a segment marked by intense investment competition.

More information: www.covestro.com, www.adnoc.ae, ec.europa.eu

Covestro AG, Leverkusen, Germany

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